Tie is making headlines in the cryptocurrency market as its USDT token is approaching 100 billion dollars in market capitalization, the largest in the market.
While this milestone signifies the growing popularity and success of Tether, a recent report by JPMorgan Chase has raised concerns about the company's compliance and transparency, Bloomberg reported Thursday (February 1).
According to the report, stablecoins, such as Tether's USDT, play a crucial role in the cryptocurrency market. Pegged to a fiat currency, they serve as a medium of exchange and store of value for traders that is less volatile than other digital assets.
However, the JPMorgan report says there are risks associated with Tether's market dominance, as what it called a lack of regulatory compliance and transparency by the company could pose a threat to the broader crypto market, according to the report.
In response, a Tether spokesperson said stablecoins are needed by those who use them and that Tether works closely with global regulators to educate them about the technology, Bloomberg said.
Scrutiny of stablecoins by regulatory bodies is expected to intensify in the United States and Europe, according to the report. The Stablecoin Payment Clarity Act, currently pending a vote in the US House of Representatives, aims to address regulatory concerns. Similarly, the European Union's Markets in Crypto Assets Regulation (MiCA) will be partially implemented in June this year.
PYMNTS reported in December that Tether has participated in the crypto industry's lobbying efforts over the stablecoin regulationspending $760,000 on lobbying in the first three quarters of 2023.
JPMorgan analysts said stablecoin issuers that have closely adhered to existing regulations will benefit from the upcoming regulatory crackdown and gain market share, according to the Bloomberg report.
Tether has taken steps to improve transparency, according to the report. The company now provides quarterly certifications, following a $41 million fine paid to the Commodity Futures Trading Commission (CFTC) in 2021 for cheat customers about your reservations.
On a Wednesday (January 31) blog post about the company's fourth quarter attestationCEO of Tether Paolo Ardoino wrote: "Tether's Q4 certification underscores our commitment to transparency, stability, and responsible financial management."
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